Today’s anticipated announcement of a £6.9bn investment into house building is a sure sign that this is a Government which is making all the right noises when it comes to tackling the crisis of home ownership.
“Today’s anticipated announcement of a £6.9bn investment into house building is a sure sign that this is a Government which is making all the right noises when it comes to tackling the crisis of home ownership.
“The huge investment in Starter Homes and shared ownership is designed to push people over the rent/buy barrier and it undoubtedly will. And yet, Starter Homes may not be the solution they appear. They may cannibalise housing that would have otherwise been built – particularly social housing and rental stock. And although they might create an initial easing at the starter end of the housing market, the fact that they can be sold in five years at market rate is hugely inflationary and tantamount to a big tax-free cash lump sum for those able to buy them. Such a populist strategy may work for the Government itself, but could cause more issues within the market during the next parliament.
“However, the £400m to be invested in homes for older people and those with disabilities is certainly a welcome measure and one that to date has been left out – this is an area currently under-funded and with a massive and growing demand/supply imbalance. It is a ticking time bomb without more appropriate supply at that older end of the market - not least because the equity release that comes from downsizing will increasingly be needed to fund retirement and also to help children get on the housing ladder!.
“What must be noted is that this announcement will focus once more on ownership, and not on the swathe of the population simply not in a position to buy. We know from models abroad that private rental can be a very viable, flexible and affordable alternative to ownership, if it is invested in and regulated appropriately. Equally, we know that homes for affordable or social rent provide a stable, affordable roof over the head of some of the poorest in our society. To take this populist ‘generation buy’ approach, while at the same time continuing to cut welfare, will only create an ever-widening gap between the ‘buyers’ and the ‘renters’. This is certainly a day of mixed blessings for the housing sector and the man on the street.”
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